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Li Shufu: A policy can decide the fate of the country as well as the enterprise

Source:Globaltimes.cn Published: 2013-12-25 11:25:01

When it comes to Chinese indigenous cars, Li Shufu is the name you can never afford to ignore. He was the first to make cars both popular and affordable on the Chinese market when private-owned enterprises were deemed unable to manufacture cars on their own and was the first to gain the production license when no one ever imagined that the government could allow private-owned enterprises to produce cars…

What makes him a household name overnight is the spectacular merger case which happened three years ago: Geely, a Chinese private-owned enterprise with only a history of 20-odd years had succeeded in buying 100 percent stake in Volvo Cars from Ford Motor with a price of $1.8 billion dollars.

When interviewed at the office of Geely HQ about the transnational merger case, which was likened to "a rural poor lad marrying a movie star", he first mentioned a question that was asked during his visit with Sweden leaders when Geely decided to join the competition to purchase Volvo, "do you know what does the brand Volvo mean?" 

He was deeply aware of this question, seemingly plain but with an attitude which speaks for itself.

As a private entrepreneur that rose from an obscure town in China, Li Shufu was discriminated and belittled constantly during his 30-odd years of struggling experience. However, history is often created and altered by some "nobody" who dare to defy the rule.

 "Give me a chance to fail!"

The merger case challenges. Li Shufu has undergone much in the Arabian Nights for Chinese private automakers. 

Li Shufu started to produce cars in 1997 when China on the one hand had a soaring need for cars year by year and foreign automakers like Volkswagen, Toyota and General Motor which built factories in China had made a small fortune; on the other hand, China's automobile industry had suffered various vulnerabilities. The ridicule and mockery from media betokens the root cause: the lack of policy support, which greatly hamstrings the viability of private car companies. 

A company needs to enter the national catalogue of car production before it could manufacture cars. After two years of efforts in vain, Li Shufu had to adopt a roundabout way by injecting capital to a car company in Sichuan to share its manufacturing permit, which only allowed him the access to the catalogue of passenger car production.

In the following years, Li Shufu devoted himself completely to market competition and engaged actively in soliciting support from government. He even pleaded when delivering a work report to the government official that, "please allow the private automakers to live their dreams. If I am doomed to fail, then please give me a chance to do so!"

When the latest Notice for Automotive Manufacturing Enterprises and Products was released on July 2001, the two new models submitted by Geely were still not included. It was also on the occasion when China was applying for WTO. If Geely was unable to enter the catalogue, it would be hard to survive, let alone further development.

Some media press even wrote an article titled Life or Death of Li Shufu to describe the urgency and subtlety of the situation, to quote from which, "Li Shufu has expected too much from the Notice. But he had no courage to catch a glimpse at the result on the newspaper when he was told that Geely has been excluded from the catalogue…"

Still dauntless after the heavy blow

Li Shufu had felt keenly the pain when opportunity was handed over but eventually kept at bay by various red tapes.

Li Shufu was born into an ordinary family in Luqiao District of Taizhou, Zhejiang Province. It is a small place but also an important trading port even hundreds of years ago where people had a natural instinct for commerce and seeking business opportunities.

Li Shufu is no exception. He was an ace student in a key high school but decided to shape his career at the age of 19 by renting a photo shop near the school.

He was an active job hopper. After the photo shop, he began to collect scrap metals to distill silver. Then he turned from building a factory supplying refrigerator accessories to one producing refrigerators… The annual revenue can reach 40 million to 50 million yuan when his refrigerator factory was at its peak hours.  

Then came the macro-economic control of 1989. The household appliance industry then was within the adjustment scope of national policy and required production by designated enterprises. Unfortunately, his private-run refrigerator factory was not on the list. Resolutely, he handed in all the factories, cash, inventory and raw material to the state and ventured in Shenzhen for luck.  

For the first time, he felt the pain of "being not qualified" as a private-run enterprise. Years later, he started to engage in the business of building material when he realized the private economy became more vigorous as the reform deepened. As a result, he started the first company in China's mainland to produce scooters.

This time he did not sit indifferently for official inspection but subordinated the company to Postal Vehicle Factory Zhejiang, a company with poor performance then, to avoid the risk of being closed again. He continued such a method to the latter automotive business.

"China's admission into WTO in 2001 is an important turning point, a new beginning for China to further reform and open larger to the outside, and a pivotal moment for us to freely participate into the business competition," said Li Shufu. It is still fresh as he recalled the feeling of learning that his car company was listed in the catalogue at the night before China joining the WTO. It will be understated to describe the mixed feeling as joyous or ecstatic.

Win his "dream lover" with "I love you"

China's admission into WTO gives Li Shufu and Geely the chance to go global. Seven years later, Geely has put on the agenda of purchasing Volvo Cars. Though few people gave vote to the merger case, Li Shufu made the determination to win.

"Use three words to describe why Geely is an appropriate bidder", someone asked when the owner Ford took Geely to dialogue with the union delegates in Sweden. Such a question rendered the representatives of Ford speechless at this crucial stage of negotiation. 

Li Shufu came forward and remarked to the union delegates of Volvo Cars: I love you. According to him, he loves the technological innovative ability, the strategy of zero emission and zero accidents of Volvo as well as the brand per se. Therefore, he would make the most of this brand and protect the interests of all stakeholders, which is also the duty and obligation of Geely as the buyer.

It smacks of little awkward when these three romantic words came from a grassroots Chinese private businessman. But such an expression brimming with sincerity won him bravos. A delegate at present removed his Volvo logo on the chest and wore it for Li Shufu himself. 

At the end of the story, he won Volvo, his dream lover.

Three years has passed. To the surprise of many, Volvo has ended the decline amidst the incredulous voices and rebounded robustly on the global market. The trade union in Sweden voted yes for this Chinese owner and the local government gave its positive evaluation. International rating agencies turned their attitudes from skeptical to cautiously optimistic towards the prospect of this largest automotive merger case initiated by a Chinese private enterprise.  

Perhaps it is his answer to all.

Sometimes a policy can decide the fate of a country as well as an enterprise… Li Shufu was sitting in the office which is far from luxurious, either recalling the past or designing the future. He did not wish to jump to the conclusion that this cross-border marriage was a success. Maybe the world map on the wall behind him, studded with marks and circles, betokens something.

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